London - Gold dropped for a fourth day as investors prepared for Britain’s referendum on membership of the European Union, with voting set to start at 7 a.m. in the UK.
Bullion for immediate delivery lost as much as 0.4% to $1,260.69 an ounce, the lowest price since June 9, and traded at $1 265.23 at 6:40 a.m. in London. It fell 2.5% in the opening three days of the week.
The metal, which rallied to the highest since 2014 last week, has dropped amid speculation voters will keep the country in the EU, diminishing demand for a haven. While polls in the lead up to voting day have shown a tight race, bookmakers’ odds favour a 'Remain' victory, boosting the pound. Governments and central bankers have warned a vote for Brexit may spark turmoil.
"At this moment the markets are all on edge," Justin Smirk, senior economist at Westpac Banking Coporation, said by phone from Sydney.
"A 'Remain' vote is a clearly known scenario. If we get an exit, we are in for a period of volatility while people try and work out what that actually means."
A decision to leave may propel gold to $1 400 an ounce, while the opposite result would hurt prices that have been boosted this year by the US Federal Reserve standing pat on interest rates, according to Societe Generale.
Either result would lift bullion’s volatility, the bank said.
Final push
The final hours before balloting saw intense campaigning by both sides, following a pause last week after the murder of Labour Party lawmaker Jo Cox, a supporter of staying in the EU. The pound, which has tended to slide when the Leave campaign showed signs of momentum, extended gains to reach its highest level this year against the dollar.
While bullion prices have declined ahead of the referendum, holdings in gold-backed exchange-traded funds have kept expanding.
The assets were little changed at 1 904.3 metric tons on Wednesday after rising for 16 days to the highest level since October 2013, according to data compiled by Bloomberg.
In other metals, palladium lost 0.6% while silver and platinum were little changed.